Pakistan Govt struggles for $1.18bn IMF tranche

Amid time running out, the International Monetary Fund (IMF) is still analysing Pakistan’s fiscal position particularly the flood-related expenditures that it viewed had changed the macroeconomic assumptions of the fund programme.

The “IMF understands that the floods have changed the macroeconomic assumptions on which the programme was designed; therefore detailed analysis is being conducted by their team using the data provided”, the Pakistan Ministry of Finance said in response to a media query on delay in 9th review.

The two sides had been virtually engaged for more than a month now in attempts to conclude the 9th review this month so that the next tranche of about $1.18 billion could be approved by the IMF’s executive board and disbursed before Xmas and new year holidays. The policy level discussions are yet to be finalised although the finance ministry said the “IMF team is expected to visit Islamabad soon for completion of the 9th review”.

Under the normal mechanism, the fund staff mission has to reach an agreement with authorities on programme implementation and then required at least a fortnight for the board members to hold a meeting based on staff agreement. A further delay would mean the unavailability of the IMF executive board until the first week of January.

Pakistan’s foreign exchange reserves in the meanwhile are critically low and the Pakistan central bank authorities have been rationing dollar releases even for essential imports like crude and petroleum products.

While Pakistan would be seeking a few waivers on slippages from the fund programme because of floods, the fund staff had been examining the government’s position on flood-related expenditure on budget and related financing flows from multilateral and bilateral lenders and donors.